Monthly report august 2025

Performance

Adrigo Small & Midcap L/S Class A and Class C increased by 0.7% in July after fees. The Carnegie Small Cap Return Index Nordic rose by 0.5% during the month.

Among the fund’s larger holdings, Initiator Pharma (biotech) and Hansa Biopharma (pharmaceuticals) contributed positively. Among the fund’s small- and mid-sized positions, we noted strong contributions from Pierce Group (e-commerce), Smart Eye (software), and Rugvista (e-commerce). The fund’s short positions, as a group, also had a positive impact on performance.

Since inception, Adrigo Small & Midcap L/S Class A, has returned 54.5% after fees. Over the same period, the benchmark interest rate STIBOR 1M returned 8.9%, and the Carnegie Small Cap Return Index Nordic (not a benchmark index) returned 107.6%.

Market Overview

Global equity markets continued to perform positively in August. The MSCI World rose by 2.1%, the S&P 500 by 2.0%, and the EURO STOXX 50 by 0.7%. In Asia, momentum was also strong, led by China (+4.2%) and Japan’s Nikkei (+4.1%).

In the Nordics, Denmark stood out with a gain of 4.9%. Sweden and Norway both rose by 1.3%, while Finland recorded a more modest increase of 0.9%. Small-cap stocks generally underperformed large-caps (CSX Sweden Small Cap Return –1.1% vs. OMXS30 +1.8%).

Companies and Performance Highlights

The surprise of the month was undoubtedly Pierce Group, which delivered a very strong result for the second quarter. Pierce Group is one of Europe’s leading online retailers of equipment, spare parts and accessories for motorcyclists, with proprietary brands accounting for around 40% of sales.

We invested in the Pierce Group three years ago, shortly after its balance sheet was strengthened through a sizeable new share issue. We knew that the turnaround would take time. When Göran Dahlin took over as CEO in the summer of 2023, he initiated an extensive transformation program, which is beginning to bear fruit. During the quarter, sales in local currencies increased by 20%, while the adjusted EBIT margin improved from 3.7% to 6.2%.

In the coming quarters, earnings will continue to be weighed down by investments in the company’s IT platform. According to the CEO, a clear reduction in costs is expected to be visible in Q2 2026. By then, several larger assets on the balance sheet will also have been fully depreciated, which is expected to strengthen EBIT by SEK 30–40 million (equivalent to SEK 0.40–0.50 per share).

During the year, Pierce has also broadened its product range and expanded into the mountain bike and scooter/moped segments. These adjacent areas should provide an additional boost to growth from 2026 onwards. With a net cash position of SEK 188 million, Pierce is also well positioned to participate in the consolidation of the European market that is likely to occur in the coming years.

Another strong contributor during the month was Smart Eye, a company that develops software for Human Insight AI, a technology that can understand and predict human behavior, for example in cars. Its solutions are integrated into vehicles through Driver Monitoring Systems and Interior Sensing Systems.

In the second quarter, Smart Eye delivered a positive EBITDA result – something the market had not anticipated. License growth within the Automotive segment exceeded 100% during the quarter as car manufacturers adapt to new regulatory requirements. Growth is expected to accelerate further in the second half of the year, when 55–65 car models go into production (compared with 15 in the first half). The stock is valued at around 11x P/E 2026, which appears very conservative for a pure software company that is a global leader in its field.

Finally, as always, we wish to thank our co-investors for your continued trust. Please don’t hesitate to reach out with any comments or questions.